The eight highest-paid employees of the city of St. Paul last year were all supervisors in the fire department. They made more than their boss, more than the police chief, more than the mayor.

Deputy and district chiefs, the individuals who command fire scenes and other emergency scenes, recently have been able to clock huge amounts of overtime, not only boosting their paychecks but also setting themselves up for higher pension checks for the rest of their lives -- a practice known as "pension spiking."

Their union, the Fire Supervisory Association (FSA), not only controls who gets an overtime shift but also has a contract clause that guarantees each deputy and district chief 192 overtime hours per year. They also get "first refusal" in many cases before a lower-ranked captain can fill one of the open chiefs' shifts.

"The bottom line is they write their own ticket," said Patrick Flanagan, a former president of International Association of Fire Fighters Local 21, the union of rank-and-file firefighters. "They schedule their own overtime. They can make as much as they want."

The overtime is necessary because the chief ranks are "short on people," said Patrick Smith, a deputy chief and the FSA president. The department is currently down three district chiefs.

"I can't apologize for the money we're making when we're working that much time, but it's an easy fix," Smith said. Hire additional people, he explained.

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Overtime has been a source of tension within the department for years. Rank-and-file firefighters have complained to city officials repeatedly. They say money used for overtime could instead have been used to prevent the temporary removal of a fire engine from service.

Firefighters have also made accusations that some deputy and district chiefs were gaming the system to reap even more overtime pay.

The department reprimanded one deputy chief in January 2011 and, a year later, reached an informal agreement with the supervisors union to cap overtime, both actions prompted by "the impression that OT policies were being abused," Fire Chief Tim Butler wrote in an email to the Pioneer Press.

Smith said FSA members have not abused the system to get more overtime, and if that perception exists, it's because of "professional jealousy."

While pension spiking is not illegal, state and national experts say it can damage a department's morale and, depending on how widespread the practice is, could also put undue strain on public pension funds.

Overtime can be a temporary solution when departments face safety concerns or staffing shortages.

"It is pretty extreme to have a lot of supervisors with a lot of overtime," said Frank Madden, a local labor attorney who also teaches at Hamline University's law school. "There is something wrong there. Hopefully, someone is working on it."

Experts, including former St. Paul fire chief Doug Holton, say that guaranteed-overtime clauses such as St. Paul's are highly unusual. Fairness, the experts explain, is typically at the heart of collective bargaining.

GUARANTEED OVERTIME

The department situation has been ripe for pension spiking.

The chiefs with the overtime guarantee -- three deputy and nine district chiefs who work 24-hour shifts -- are at the heights of their careers in salary and years. With the ability to work hundreds of hours of overtime annually, they can raise their own pension checks.

The pension formula in Minnesota is based on the highest five consecutive years of a person's salary.

Minnesota lawmakers have already addressed pension spiking by excluding special compensation such as unused sick time payouts from retirement benefit calculations. Unlimited amounts of overtime, though, are included.

The deputy and district chiefs run day-to-day operations. Their base salaries range from $87,500 to $111,000. And since the late 1990s, they have had a clause in their union contract guaranteeing a minimum amount of overtime.

When they were out sick or on vacation, it used to be that one of three pool chiefs would fill in. Those jobs were cut in 1996.

The FSA sued over the city's plan to use lower-ranked captains to fill open shifts. The union wanted to protect their jobs and had safety concerns about "untrained and less qualified" captains commanding emergency scenes, Smith said.

Ultimately, the city agreed to add guaranteed overtime starting with the 1998 contract. The "right of first refusal" clause was added in their 2008 contract.

The rank-and-file union, Local 21, doesn't oppose FSA's contractual right to eight overtime days per person. But it is concerned the supervisors are working excessive amounts beyond those eight days, said Mike Smith, the Local 21 president. They've told officials that overtime money could be better distributed.

"They basically told us, 'Don't worry about it,' " he said.

STAFFING SHORTAGE

City records show the fire department used overtime to cover, on average, 50 percent of the deputy and district chief shifts each week last year.

So far in 2012, that average is down slightly to 40 percent.

The department estimates it needs to fill about four chief shifts each week because of illness or vacation. The staffing shortage has made it worse.

St. Paul's department is short 15 captains, from an authorized 94 positions; and three district chiefs, from nine.

Civil service commission rulings and lawsuits found the city erred in scoring methods used in 2010 and 2011 promotional exams for captains and district chiefs. As a result, the city's ability to fill those slots has been limited.

The department will spend about $250,000 on overtime to cover chief vacancies this year. That's $22,000 more than if it had been able to fill the jobs, according to fire department records.

John Fossum, a human resources and management lecturer at the University of Minnesota, said cities need to find the tipping point between when hiring more staff saves more money than paying overtime.

The fact that fire supervisors built overtime guarantees into their union contracts shows that they know how to work the department's needs to their advantage, Fossum said.

Given the circumstances, Butler says, overtime is being managed well. Throughout the department, overtime is down about 20 percent from five years ago, when it reached about $2.5 million per year. Last year, the department spent just over $1.8 million, which was about 5 percent of its total wages.

"I think we're spending it as frugally as we can, and I think the people of St. Paul are getting good value for their dollars," he said.

The department is addressing the vacancies and has just finished testing for captains and hopes to conduct a district chief test by March, Butler said.

SUPERVISOR OVERTIME SOARS

After the 2008 contract change that gave the chiefs "right of first refusal" on most overtime shifts, their hours jumped dramatically.

Before 2007, deputy and district chiefs averaged about 200 hours of overtime a year. They've averaged 450 hours since, according to city salary data.

Meanwhile, rank-and-file firefighters are working about 72 hours of overtime now, down from 140 hours a year previously.

This is partly due to Butler beefing up the firefighter ranks while the chief ranks have been unchanged since a 40 percent cut in the 1990s, FSA President Patrick Smith said.

City salary data show a consistent pattern among fire department workers that most overtime goes toâ longest-tenured members and that large bumps in salaries are common during their final years of service.

The pension fund expects to see average pay increases of about 4.75 percent in a person's final years, but about 90 percent of fire department employees who retired since 2008 had pay increases more than double that. About 70 percent of those who retired between 2003 and 2007 also had pay increases exceeding 10 percent.

Much of this is due to overtime.

Throughout the entire fire department, employees work on average 35 percent more overtime in the four years before retirement than the four years prior, the Pioneer Press found.

The next highest city department is police, where employees average about 7 percent more overtime in their last four years. Water department employees work 25 percent less overtime in their last four years.

Holton, the city's fire chief from 2003 to 2007 and now an associate dean at the Madison (Wis.) Area Technical College, said he's never seen another fire union contract with guaranteed overtime.

While chief, Holton regularly received anonymous complaints saying the "overtime was distributed unevenly," he said.

Complainants told him both firefighters' unions "gave most overtime to individuals within five years of retirement to pump their pension," said Holton, who had a rocky relationship with both unions.

"My impression of it was you kind of had to wait your turn," he said.

But both unions say there is a fair system for members to earn overtime. They have a list based on seniority and job classification, but once someone accepts an overtime shift, they are moved to the bottom of the list.

The chiefs union said there isn't a concerted effort to spike pensions, though there is a natural inclination for individuals nearing retirement to have their pensions in mind.

"Everybody's trying to maximize pensions however they can," said Smith, the FSA president. "The increased overtime wasn't created by us. ... It wasn't our goal to create this overtime issue so we could pad our pension."

Mark R. Mueller retired as a deputy chief in November 2011. He averaged 500 hours of overtime and $130,000 in pay his last four years. His overtime jumped nearly 50 percent after his 2007 promotion.

Mueller said he worked overtime for family considerations, not to boost his pension. The extra money -- about a 20 percent increase -- helped put two daughters through college, pay the mortgage and allow his wife to work less. And some of that overtime was related to the 2008 Republican National Convention in St. Paul.

Mueller retired at age 56 after 32 years with an annual pension of $114,400, the third-highest among city employees who have retired in the past decade, behind only two former police chiefs, according to pension records.

A police officer or firefighter who retires at the same age and years of service as Mueller, but with a final average salary (or "high five") of $100,000, would get a pension of about $96,000.

Mueller noted, however, that retiring meant a "$20,000 hit in family income" and that he has taken on a part-time job.

"This overtime was not some gift the city gave us," he said. "We were at work for long hours."

ONGOING TENSION

Overtime issues in the department have surfaced repeatedly over the years.

A 2007 external audit found an "alarming" department-wide increase in sick time because some firefighters on opposite shifts were "reported to be coordinating absences" in an apparent attempt to collect more overtime.

Butler and the FSA recently reached an agreement intended to "fix the underlying issues that might allow some to misuse OT," Butler wrote in an email.

Patrick Smith counters that the agreement, which caps overtime at 16 shifts (or 384 hours) per person unless authorized, was reached because the city needed to save money on overtime.

The problems, Butler said, had to do with language in the contract that says deputy and district chiefs can accrue their eight guaranteed overtime shifts per year only by working "scheduled" overtime shifts -- such as those filling in for another's vacation.

There were ways around the wording, according to Jason Schmidt, the city's labor relations manager. A person scheduled to fill in for one of those overtime shifts could instead work for someone else who had called in sick, thus it would not count against the guaranteed shifts.

Schmidt said unconfirmed reports of this shift swapping came up before the 2008 contract was negotiated and his office wrote fire officials in 2009 reiterating that it was still a problem.

The accusation that FSA members called in sick so someone can benefit from overtime "is totally inaccurate," Patrick Smith said.

The department reprimanded Dennis Appleton, a deputy chief who retired in March 2011, for two instances in which he took vacation days in order to work an overtime shift, either the day before or the day after, according to fire department spokesman Steve Zaccard.

Employees can't work more than 72 hours (three shifts) in a row, and Appleton would have violated that if he hadn't taken vacation.

Appleton didn't violate work rules or contracts but was causing more overtime than needed, Zaccard said.

Appleton, who worked for the department for 33 years, declined to comment.

Butler said Appleton's reprimand is the only official action he's aware the department has taken against an employee related to overtime. Appleton's actions haven't been common practice, and the union tells members not to do it, Patrick Smith said.

The city's labor relations department, though, said the deal between the FSA and Butler is "not enforceable" because Butler is not authorized to negotiate on the city's behalf. But both the chief and Patrick Smith said they would continue abiding by it, even after it expires at the end of the year.

Patrick Smith said FSA would be open to including an overtime cap in the next union contract. Initial negotiations are expected to start Friday, Dec. 14.

The supervisors union will likely propose hiring pool chiefs to ease overtime burdens. Butler would also like to see the pool chiefs return, but overtime has been significantly cheaper than salaries and benefits for new positions.

"If I wanted to eliminate district chief overtime right now by hiring people to fill those positions, it would cost the city a lot more to hire new people," Butler said.

ONLINE

Go to TwinCities.com/pensions to see key documents related to this report, search the city's public employee salary records and find links to additional pension information.